When a line is flashed on a patterned disk rotating back and forth at its turnaround point, the perceived location of the line is often dramatically displaced, known as the flash grab effect (Cavanagh & Anstis, 2013). Like other illusions in the motion induced position shift family, the neural mechanism of the flash grab effect remains unclear. We conducted a combined fMRI and ERP study to investigate the spatial and temporal neural correlates of this perceptual effect. In different sessions, participants viewed the visual display showing the flash grab illusion repeatedly in the fMRI scanner and with ERP recording sessions. The physical flashes were presented at the vertical meridian, while the perceived locations of the flashes were either to the left or the right of the vertical meridian. Following the localization of the retinotopic visual areas in each participant, results clearly show that the distribution of fMRI BOLD signals in V1, V2, and V3 could be well predicted by the perceived, but not the physical, positions of the flashes. In the ERP signals, while a robust and clearly lateralized C1 was seen from physically displaced flashed lines, no such lateralized signal was observed in the typical time window of C1 from the perceptually displaced flashes, suggesting that the perceptual illusion was unlikely a result of feedforward processing. For the perceptually displaced flashes, there was a hint of a lateralized signal in the occipital area about 20ms later than C1, and significantly lateralized ERP signals emerge only at the later N1 component. Taken together, the combined spatio-temporal imaging results suggest that the perceived displacement of the flashed target in the flash grab effect is instigated by feedback signals from high-level areas to early retinotopic visual cortex.